Drugs & Pharmaceuticals

  • Overview
  • Why Karnataka?
  • Policies & Initiatives
  • Investment Opportunities & Facilitation

India ranks 1st amongst the developing countries in the Pharmaceutical sector in terms of quality, technology and range of medicines and 4th in volume and 14th in terms of value.Karnataka with its forward looking policies, infrastructure, R&D and skilled workforce capabilities is among the top contributors to the Pharmaceutical sector in the country. The Pharmaceutical Industry revenues in India are expected to undergo rapid growth at a CAGR of 12.1% during 2012-20 and reach USD 45 Billion by the end of the term. The OTC (Over the Counter) drug market stood at USD 3 billion in 2011 and is projected to rise to USD 6.6 billion by 2016. USD 200 billion has been earmarked for medical infrastructure development in India in the next decade. Karnataka's investor-friendly and responsive administration has worked towards easing administrative procedures and implementing policy measures for faster and smoother industrial growth, making the state a prime destination for investment and growth in pharmaceutical production, export and infrastructure development.

Key drivers for growth in the segment:

Gifted with a large and competitive work force and a low production as well as R&D cost, India has emerged as a key pharmaceuticals exporter. It is empowered with over 200 export destinations including regulated markets in North America and Europe. The key to the success of the Indian Pharma industry is their ability to retain their cost advantage while matching the quality standards of the West. Consistent FDI inflows to the Drugs and Pharmaceuticals industry in India have helped in the large-base expansion of the industry. Karnataka being a front runner in production, resource and skill abundance and availability of raw material is now a preferred FDI destination. Pharma policy growth drivers marked by FDI up to a 100% being permitted under the automatic route for Greenfield as well as Brownfield investments has the sector geared up for exponential growth, investment as well as export.

Karnataka is amongst the top 5 contributors to India’s GDP and industrial output, making it a leading economic hub of the country. It also has the 4th largest share of workforce and cumulative FDI and is the 3rd largest contributor to the GVA in the country. The state has the 6th largest number of factories in the country and standing as the technology start-up capital of India. These parameters along with the state government’s supportive policies, skilled manpower, advanced R&D, best in class technology and world-class infrastructure along with ease of connectivity and a thriving innovation and start-up environment makes Karnataka the hot spot for the Pharmaceutical sector.

Karnataka also has an investor-friendly responsive administration. The State-level single window Clearance Committee and the State high level Clearance Committee facilitate clearance of proposals in a speedy manner. A special focus has been given to skill development to enhance generation of technical manpower in the Pharma sector. Also, sector-specific industrial zones and SEZs that match the natural resources and capabilities of a region with the industry requirements have been attended. These aspects further enhance the state’s attractiveness to investors.

Track Record:

Karnataka is the home to over 230 Pharma and Bio tech companies. It has generated revenue of INR 8,030 crore which contributes to 8% of the country’s total revenue in Pharmaceutical sector. The state stands 5th in Pharmaceuticals exports with 40% of its Pharma produce being exported overseas. Karnataka has shown the highest growth rate in terms of exports that is, reaching up to 12% in the year 2013-14 amounting to about Rs.290418 crores. Furthermore, it constituted to about 12.37% of the country's exports and contributed to 10% of the Indian Pharmaceutical export revenues. The state has also found a spot in the top 10 in list of states having the maximum number of Pharma manufacturing units in the country. This has been achieved by its 221 formulation units and 74 bulk units, constituting 3% of country’s manufacturing units. Exclusive Pharma Industrial areas and Pharma SEZ at Hassan and Yadgir assist in more such units being set up as well as in expanding and upgrading the capacity of the existing facilities.The industry boasts high quality cognizance on par with international standards while maintaining a low cost production average. This is reflective in investments worth $147 million made in the Pharma sector in 2010-11 which consequently generated 6,635 jobs and a total turnover of Rs. 6500 crore in 2010-11 with a growth of 10%. Karnataka’s exports as a percentage of the GSDP has been an important contributor which has increased significantly over 2013-14.

It is the Karnataka Pharmaceutical Policy 2012 measures which distinguish Karnataka amongst India’s leading investment destinations.Policy highlights and focus areas can be classified broadly under infrastructure, R&D and mega projects.

Infrastructure: Development of Pharmaceutical parks in potent locations in Karnataka would be encouraged through PPP. Further, setting up of SEZs under the provisions of the SEZ policy is of focus.

R&D: Attention to setting up R&D institutions to levy the strengths of the State and the allocation of supportive fiscal incentives and grants for promoting R&D activities.

Mega projects: Focus on attracting Mega Pharmaceuticals projects to achieve global competency, production development and export goals. The policy also provides special incentives and concessions to attract mega projects to widen the scope for ancillaries, downstream and supporting activities.

The Department of Pharmaceuticals (DoP) has set up an Inter-ministerial Coordination Committee to periodically review the constraints and issues being faced by the pharma industry and facilitate needful resolutions.The government’s commitment towards elevating this sector is reflected by its initiatives put forward to set up a venture capitalist fund aided with significant contribution, forming of the Karnataka Pharmaceutical Development Council (KPDC) and the Vision Group and additional promotional activities around the sector.

Karnataka government has set a target of 15% growth for pharma sector to rise from current 8%. KDPMA is working towards 100% implementation of the Pharma Policy & establishment of more Pharma Parks. The state stresses upon procuring investment for Infrastructure Development namely, PPP-based Pharma SEZ’s and technology parks.

Key focus areas include:
  • General infrastructure, biotechnology finishing schools, and commercial space
  • Manufacturing units for bulk drug formulation and development of medical devices
  • Research and Human Resource Development
  • R & D Centres
  • Industrial Training Centres and PPP-based vocational training programs
  • Sector specific Centres of Excellence
  • Innovation and Incubation Centres for start-ups
  • Established exclusive Pharma industrial areas in Hassan and Yadgir
Department of Industries & Commerce
#49, Khanija Bhavan, South Wing,
Race Course Road, Bengaluru - 560001